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House International Relations & Economic Development and Transportation met on September 30 a joint hearing to discuss the Texas/Mexico border in relation to trade and supply-chain opportunities as well as the impact of border migration on operations. A video of the meeting can be found here.

 

This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Comments

  • Chair Canales – Will discuss impact of border migration on economy; will not discuss cause of border migration
  • COVID-19 seems to have greater impact on economy; need to maintain consistent supply-chains
  • Chair Button – Mexico is an important trade partner, this topic is important to discuss

 

Invited Witnesses

Marc Williams, Texas Department of Transportation

Caroline Mays, Freight International Trade and Connectivity TXDOT

  • Williams – Important to enable mobility and greater trade capabilities with MX; TXDOT investing lots of money and resources in TX border capabilities
  • Mays – Trade with MX vital to TX and U.S.; $615 billion operation; $213 billion made by TX, $451 billion of total amount due to border crossings
  • US trade with MX decreased by 13.5% due to COVID; TX saw 17.5% decrease in trade with MX
    • Border crossing trade decreased by 13.4%
  • TX/MX trade profits $24 billion for border region, $59 billion for TX GDP, $169.9 billion for U.S. GDP
  • Creates 300 jobs in TX border regions, half a million jobs in TX, and 1.4 million jobs in U.S.
  • Graphs show significantly higher migrant encounters recently; majority of encounters in TX
  • RGV region experienced higher volume of border crossings
  • Trucks dominate U.S. MX trade; truck crossings continue to increase, almost back to 2019 levels
  • Recent 7-day closure of RGV crossing impacted trade and truck traffic
  • At Del Rio crossing, in 2020, processed $4.2 billion in trade, in 2021, $2.5 billion in trade
  • Del Rio handles about $12.5 million a day at single border crossing
  • 7-day closure resulted in traffic diverted to Eagle Pass; added cost of $50,000 a day, increased supply-chain cost of $455,000 dollars a day
    • Closure resulted in a $22,000 a day revenue loss for Del Rio
  • Martinez – What is TXDOT’s definition of infrastructure? Includes drainage?
    • Williams – Definition focused on highways, transportation systems that move goods and products
    • Includes drainage if it impacts transportation
  • Martinez – Have sent various letters and requested funding for drainage fix; any reason for delays?
    • Williams – Infrastructure associated with drainage involves comprehensive solution, need to work with regional partners
    • Martinez – Need infrastructure in place to solve this, has been over 4 years
  • Canales – Need to address drainage; in cases of flooding, stops ebb and flow of goods and puts local communities at risk
  • Canales – TXDOT doesn’t give them a proportionate amount of funding relative to positive impact; trade and border crossings in region impacts border and food security
  • Ortega – More information gathered in regard to how COVID has impacted other communities? How it’s impacted El Paso?
    • Mays – Have numbers on border crossings and COVID; numbers for each region, will share
  • Canales – Majority of contraband from MX being brought through with tractor-trailers; infrastructure is part of border security
  • Button – Approximate percentage of total international trade for U.S. from border trade?
    • Williams – TX/MX trade makes up 75% of trade across whole border; Laredo sometimes #1 or #2 on port of entry in U.S.
    • Mays – $615 billion from U.S./MX trade
    • RGV region one of biggest produce crossings; is important for automobile supply chain
  • Canales – Border wait times a huge concern; MX has better infrastructure, what is TXDOT doing to address this?
    • Williams – Investment in infrastructure important priority; looking at technological infrastructure to give truckers more information
    • Border trade advisory committee addresses these issues and how to ensure infrastructure aligns with efforts in MX
  • Canales – Wait times on U.S. side of border, losing out on millions of dollars as result

 

Pia Orrenius, Federal Reserve of Dallas

  • Trade trends show TX exports recovered to pre-pandemic levels; pandemic has suppressed tourism from land-crossing tourists from MX
  • Migration levels at a new high, but immigration overall is trending down for nation and TX, fell sharply in 2020
  • Border economy growing faster than rest of the state; many small businesses hurt by border shutdown
  • Border economy doing well due to: pandemic stimulus programs, trade with MX benefitting border employment, influx of federal and state resources
  • TX leads nation in exports, $270 billion worth; MX number one trading partner with a third of TX exports going to MX
  • Surge in encounters of migrants on border; net international migration to TX is decreasing, domestic migration increasing
  • Migration rates from MX trending down for past 10 years
  • Border retail sales held up well despite obstacles over past 2 years; job growth in border regions higher than in rest of state
  • New challenges include supply-chain disruptions and labor shortages as economy tries to grow
  • Migration surge will not impact trade, unless crossings are closed
  • Canales – During recession, sales tax unaffected?
    • Referring to pandemic recession, retail sales only slightly down considering everything else going on; stimulus programs were very important
  • Canales – During recession, border was stronger than rest of nation; barometer for U.S. is border region
    • During recession, no housing bust in border region, less affected by housing bust
  • Canales – In general, numbers of people migrating from Latin America are down?
    • Central America numbers have probably increased, but from Mexico, decreased
    • Increasing migration from Asia; doesn’t include asylum-seekers
  • Button – What happens if we stop pandemic stimulus? As they stop, what will happen?
    • Still quite a bit stimulus money out there; child tax credit helps border region
    • Student loan payment suspension also helps
    • Opening border to nonessential traffic important for border region

 

John Esparza, Texas Trucking Association

  • When agents are moved from one area of state to the other, effects trucking industry due to expanse of inexperienced agents
  • When there are issues cross-border, has impact on movement of goods across border
  • Seeing labor shortages and problems across the board; need a combination of solutions to help impact shortages
  • Until we dedicate more revenue to infrastructure, cannot solve anything
  • As supply chain issues continue to compound, want to avoid panic that is occurring in Europe
  • Wait times an issue, need to see improvement; use of technology can improve border crossing
  • Motor carry industry representing 1 out of 15 jobs in TX; serving 82% of communities exclusively
  • Part of attraction for trucking jobs is being able to get home to families faster by alleviating congestion
  • Canales – Talks about impact of inexperienced agents affecting all industries
  • Ortega – No easy solution regarding driver shortage; any opinions on cause of problem?
    • Shortage caused by some of the issues addressed; quality of life impacted by congestion on roads
    • Driver pay has dramatically increased and improved; shows demand that freight puts on drivers
  • Ortega – So with improvement of infrastructure, should help with driver shortage?
    • Yes, without question
  • Ortega – What is average wait time at border?
    • Varies; not uncommon for 45 minutes to an hour to cross; 3-4 hours at extreme, impacts driver and freight

 

Cynthia Garza Reyes, TX Border Coalition

  • TBC works with state and federal government to secure funding for transportation, immigration, and border security
  • Border crossing profits impact whole state; generates more than 7 million jobs
  • 65% of nation’s produce crosses TX/MX border; 495% ROI on produce; 6,000 commercial trucks cross border each day, $36 billion a year in truck profits
  • 28 border crossings in TX, trans-border connections serve all of U.S., MX, and Canada
  • 2nd largest land port of entry in Laredo; TX/MX border freight huge engine for state and national economy, will triple by 2050
  • S. congress going to vote on infrastructure bill; TBC has been working with federal officials on many of these provisions
  • Enactment would increase spending on transportation programs and funding; includes $3.5 billion for land ports of entry
  • Bill would be springboard for the growing border region
  • Recommendations for funding include decreasing wait times, increasing connectivity, bettering technological infrastructure updates
  • TBC supports TXDOT’s master plan and Congress’ bipartisan infrastructure bill
  • Canales – Do you have total amount of how much border wait times impact TX?
    • Can get that number
  • Canales – In 8 weeks, approximately a million trucks pass through Laredo; when truck crosses, is there a connection to interstate or do they go stoplight to stoplight?
    • No connection to interstate highway; most Valley residents have 18-wheelers next to them on city streets
    • Need I-69 interchange expansion
  • Canales – Every truck that goes through RGV has to go through local communities; can you describe hurdles to get funding for infrastructure development?
    • Having discussions with TXDOT for additional corridor just for commercial traffic
    • Expensive project but very necessary for trade to have own corridor
  • Canales – Border region also large exporter of oil and gas; potentially dangerous products being driven through communities due to lack of proper corridor
  • Button – What is your estimation of impact of tension in border area on operations?
    • International bridge not missing beat in movement of trade; numbers continue to climb in number of trade crossings, COVID did not impact trade movement
    • Commercial crossing bridge does not attract migrants
    • Del Rio was a crisis; had to stop trade, but only really impacted Del Rio crossing

 

Albert Zapanta, U.S./Mexico Chamber of Commerce

  • Over $1 trillion trade industry in North America; 1 U.S. trading partner Canada, then Mexico; being driven by energy and ability to move goods over trains and pipelines
  • To build land port, 10-year process; on MX side, always a catch-up game to try to match infrastructure and funding of U.S.
  • California and Tijuana port of entry, wait times 3-6 hours; impacts fuel and environment
  • Flooding is a major issue for infrastructure; trash coming off highways from flooding also an issue on local level
  • Discusses the San Diego and LA congestion; is a structural issue impacting trade
  • California companies moving to TX; all about supply-chain
  • Cannot be dependent on federal or state government; private sector is the driving force
  • If supply-chain is not moving will have a bottleneck effect on border crossings
  • Crime creeping up in local community due to influx of migration; recommends implementing technology into border security
  • Border region still a pass through region, no fortune 1000 companies on border
  • Ability to improve crossings still 10 years away due to time it takes to improve infrastructure
  • Private industry and private sector essential to border improvements

 

Jon Barela, Borderplex Alliance

  • State of TX moving to hemispheric globalization, consolidation of supply-chains
  • El Paso region is 5th largest manufacturing hub in North America; 2.7 million people in region; 300,000 individuals directly involved in manufacturing in region
  • Reshoring poses incredible opportunity for states; record levels of project leads, 35% of them are reshoring opportunities from China; future reshoring could bring 100,000 jobs to region
  • Reshoring opportunity due to a number of factors
    • Transportation costs: 1.5 million unmoving shipping containers stuck off beach in LA; strategic and sizable threat to economy
    • Increasing labor costs in China that will be much greater than what they could be in MX
    • Reliability also a big question mark, making companies rethink investments in China
    • Punitive political system in China; recently implemented “common prosperity”; businesses returning to America for business investments
    • Geopolitical tensions last big factor
  • Need to invest at state and federal level to deal with wait times at border crossings; infrastructure bill should include opportunities for investment
  • Need to keep congressional delegation focused to make sure TX gets fair share of resources
  • Provides an example of a company in El Paso that moved Eastern Europe for better supply-chain
  • Ortega – What can state do to capitalize on opportunity?
    • Little regulation, fair taxes, good education system to provide trainable workforce
    • Consider passing extension of Chapter 313, Reauthorization
    • At federal level, personnel, technology, and infrastructure at ports
  • Button – Agrees that Chapter 313 needs to be passed
  • Canales – Have visible crisis at border, but larger crises regarding industry and China
  • Ordaz Perez – Clear that there is a tremendous opportunity to reshore supply chains to North America and TX border region; curious about increase of volume of trade, and what this means?
    • Until COVID ends, border region most logical place to put supply chains; in the next 24 months, could see an increase of 10-20% of freight traffic through ports of entry
    • 4 million square feet of new warehouse and manufacturing space in Ciudad Juarez; nearly 4 million sq feet of space being built in El Paso
    • Working on major projects in El Paso that would be a game changer for region
    • Volume increase could be much higher with correct establishment of supply chains
  • Button – Referenced China’s political system, proud of TX for maintaining freedom, liberty, and ability to compete; have solid, low regulation and strong competitiveness
  • Ashby – A lot of opportunity for state and border communities; this work is just tip of the spear; good global opportunities
  • Canales – El Paso needs more border infrastructure to reduce wait times; ROI would be incredible; rail lines in El Paso very impressive

 

Cindy Ramos-Davison, El Paso Hispanic Chamber of Commerce

  • Cross border trade essential to region and economy
  • Local businesses facing labor shortages and financial troubles due to restriction of nonessential travel placed on border
  • Lack of investment in infrastructure making problems for local businesses
  • Businesses need to know when bridges will open; if not opened by December, many will have to close
  • 30% of minority, women, and veteran-led businesses have closed since beginning of pandemic
  • Are there any state projects aimed at helping businesses hindered by closed border